Widespread financial vulnerability surges in Canada

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Financial stress on the rise. A staggering 76 percent of Canadians are struggling

The Financial Resilience Institute’s eighth Seymour Financial Resilience Index, released today, discloses a significant increase in financial vulnerability across Canada. The Index findings spotlight the nation’s deepening financial fragility while also showcasing some notable trends in financial well-being.

The Financial Resilience Institute assesses household financial resilience using its peer-reviewed Financial Resilience Index. The Index, updated three times a year, measures financial resilience across nine behavioural, sentiment, and resilience indicators, with a baseline established in February 2020 before the pandemic’s impact.

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The June 2023 Index score for Canada reveals a worrying trend, with the nation’s mean financial resilience standing at 52.44. Canadians at the national level are now classified as ‘Approaching Resilience,’ marking a marginal increase of two points since June 2022 but a worrisome decline of three points from the pre-pandemic period in June 2020.

The Index’s key findings illustrate the following distressing trends:

Widespread financial vulnerability: A staggering 76 percent of Canadians, equivalent to 19.5 million adults aged 18 to 70, are now categorized as ‘Not Financially Resilient.’ This widespread vulnerability spans across all income demographics, with an astonishing 22 percent of Canadians earning more than $150,000 annually deemed ‘Extremely Vulnerable’ or ‘Financially Vulnerable.’

This surge in financial vulnerability, according to the Index, signals an alarming downturn in the financial well-being of Canadians, with ‘Financially Resilient’ households decreasing from 31 percent of the population in June 2021 to a mere 24 percent in June 2023. Furthermore, 18 percent of Canadians now find themselves ‘Extremely Vulnerable’ to various financial stressors, though this represents a slight decrease from the 21 percent observed a year ago.

Continued high levels of financial stress: The Index also reveals a worrisome increase in financial stress, with 52 percent of households experiencing heightened anxiety levels regarding their current and future financial obligations. This is a stark rise from the 43 percent reported in June 2022. A significant 60 percent of Canadians say that the exorbitant cost of living negatively impacts their quality of life, while 49 percent indicate that financial concerns are taking a physical toll on their well-being.

Financial hardship: Forty-two percent of Canadians are grappling with significant financial difficulties. Essential expenses are beyond the reach of 23 percent of families, and 16 percent of households are struggling to access affordable food, a crisis affecting 44 percent of ‘Extremely Vulnerable’ households. Housing affordability remains a pressing concern for 55 percent of Canadians and is particularly acute for 82 percent of ‘Extremely Vulnerable’ and 69 percent of ‘Financially Vulnerable’ individuals.

Changing financial behaviours: Despite the efforts of many households to cut non-essential expenses (69 percent in June 2023, up from 56 percent a year earlier), the high cost of living has forced 62.5 percent of Canadians to spend either more or the same of their household income, marking a significant rise from 53 percent in June 2021.

Savings and debt: As of February 2023, 84r percent of households find their cost of living outpacing income growth. A third of Canadians have resorted to increased borrowing to meet essential expenses, while 42 percent have had to dip into their savings to service debt obligations. Shockingly, only 50 percent of Canadians maintain a liquid savings buffer of three months or more as of June 2023, down from a high of 64 percent in 2017. Nearly a quarter of the population (24 percent) now possesses a buffer of less than three weeks, and a troubling 37 percent have either a negative or zero household savings rate as of June 2023.

Increased financial vulnerability for variable-rate mortgage holders: The rise in interest rates has compounded the financial vulnerability for many Canadians, with 67 percent overall reporting concerns about rising interest rates. However, the impact is most acute for 88 percent of variable interest rate mortgage holders. The Index shows a decline in the proportion of ‘Financially Resilient’ mortgage holders from 33 percent in June 2021 to 18 percent in June 2023.

Eloise Duncan, CEO and Founder of the Financial Resilience Institute, said “The latest Index from the Financial Resilience Institute highlights the financial vulnerability and stress faced by many Canadians. It is crucial to recognize the financial challenges encountered by significant portions of our population and to bring to the forefront the need for Canada to chart a course toward financial resilience.”

| Troy Media

To interview Eloise Duncan, click here.


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Troy Media is an editorial content provider to media outlets and its own hosted community news outlets across Canada.

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